EDIT: Chillin link for troubleshooting XP Standby issues:
http://www.kellys-korner-xp.com/xp_standby.htm
Couple of points to check up on, (some have been covered already)
1. Are you running a 3D Screensaver (thankfully the default setup of XP ISNT a 3D screen saver...) - I think this may be fixed in SP2, but not sure. Having a 3D screensaver disables Hibernation.
2. This has been mentioned a few times already, but it is very important: Have you updated your video drivers yet? Fixed several of these issues by upgrading the vid drivers
There are also some good steps/points here:
http://service.steinberg.net/knowledge_pro.nsf/0/67e18c406ce0356fc1256ab5003b6491?OpenDocument
You may have the setting in your BIOS - for Plug and Play OS set to 'NO' or disabled. Try enabling it, or disabling it (if it's already enabled)
Could also be an IRQ conflict, though XP and the newer motherboards manage this quite well, so it shouldn't be the cause of the issue.
More tips here:
http://support.microsoft.com/default.aspx?scid=kb;en-us;Q314068
There is also this option I lifted off another forum:
You can also change from ACPI to Standard PC in you device manager. 1: press Windowskey + Pausebreak to enter system properties. 2: Open 'hardware' tab. 3: Click 'Device manager' 4: Click on the + symbol in front of 'computer' 5: Double-click 'Advanced Configuration and Power Interface (ACPI) PC' 6: Open 'driver' tab 7: Select 'update driver' 8: Select 'Install from a specified location' 9: Select 'Don't search, I will choose the driver to install' 10: Select 'Standard PC' (maybe you need to de-select the 'Show compatible hardware' box) 11: Click next and follow instructions. After reboot, WinXP will re-detect all devices and re-map all IRQ's. But be aware ... you can not 'roll-back' this driver to ACPI. After you've installed the standerd PC driver you machine also won't shut-down automatically anymore when you quit Windows. You will need to power off manually when it says 'It's now safe to turn of your computer'.
NOW, once you've done this, run an XP repair, and it will reinstall your ACPI config.
Hope this helps guys, I'll keep a lookin.